Historically, most companies have given the offices of CEO and chairman of the board of directors to a single person. Companies in favor of combining the roles say that having a single person head both the board and management smoothes the decision-making process, reducing conflict in the boardroom, and unifying the company's strategy behind a single vision.
But the practice is controversial. Regulators and corporate governance analysts warn that having the CEO serve as the chairman of the board of directors concentrates too much power in one person. And they argue that there's a conflict of interest in having the CEO chair the board that supervises his or her own job. Critics of rising CEO compensation also point to the combined role as part of the problem of determining fair compensation.
The split
As a result, regulators and corporate governance analysts have put pressure on boards to either split the roles of chairman and CEO or take other steps to establish the board's independence from the CEO. The Conference Board Commission on Public Trust and Private Enterprise, a 12-member independent commission established in 2002, has suggested that boards that retain a CEO chairman should name a presiding independent director who has the right to perform some of the chairman's traditional duties, such as calling meetings of the board.
Dissent in the boardroom
Some corporate governance analysts say that splitting the CEO and chairman roles isn't enough if the board's corporate culture encourages unanimous agreement and stifles dissent. Even directors who are CEOs of other companies may have difficulty challenging a CEO in his or her own boardroom. So some companies require directors to undergo continuing education to help them understand their role and responsibilities, although not all companies do this.
The split
